IBM Wins Another $6bn From Dell in Services Pact

By William Fellows IBM Corp and Dell Computer Corp duly extended their $16bn OEM technology agreement with a pact that will earn IBM $6bn over seven years for installing, servicing and maintaining systems for Dell’s corporate, government and education customers. The process was instigated on Labor Day 1998 by a call from Dell vice chairman […]

By William Fellows

IBM Corp and Dell Computer Corp duly extended their $16bn OEM technology agreement with a pact that will earn IBM $6bn over seven years for installing, servicing and maintaining systems for Dell’s corporate, government and education customers. The process was instigated on Labor Day 1998 by a call from Dell vice chairman Kevin Rollins to IBM Global Services chief Sam Palmisano. The deal was still being nailed down when IBM and Dell announced their huge seven-year technology OEM deal in March. Dell didn’t say when the deal would be accretive to earnings.

The agreement extends to Dell’s overseas markets that will be supported by IBM Global Services from the beginning of next year. The deal initially covers basic fix and repair tasks but could leverage other IBM skill-sets including e-business and the application service provider hosting ‘meagcenters’ that IBM is creating, Palmisano told ComputerWire. The megacenters are being built upon data centers IBM retained after the sale of its network services business to AT&T Corp. The $28bn IBM Global services claims to have around 8,000 hosted customers.

Dell said it will continue to offer customers services from its existing suppliers including Unisys and Gentronics’ Wang division. Dell’s 3,600-strong field services team is now supplemented by IBM’s 22,000 Global Services employees. The Dell deal is not Global Services’ biggest. Its deals with Lucent Technologies and Boeing are larger, said Palmisano, while the recently signed Cisco systems agreement promises to be larger in future. Palmisano says that IBM now supports around 40 million devices, several million of them non-IBM. He claims there are other technology and services deals in the pipeline but didn’t say who with. Compaq Computer Corp was rumored to be having talks with IBM about technology sourcing while Eckhard Pfeiffer was still holding the reins, but those leads have gone cold since he was replaced as CEO by Michael Capellas.

Reviewing Dell’s operating system strategy, Rollins focused on Windows NT and Linux. He made no mention of support for Sun’s Solaris or SCO UnixWare, both of which it does support. It appears that Dell still hasn’t decided whether it will opt for the IBM/SCO Monterey64 Unix, which is being developed for IA-64. Back in March Dell told ComputerWire that it was in discussions with IBM about the possibility of using Monterey64.